Codrus Minerals has finalised a binding agreement for offloading the tenements constituting the Silver Swan South Project to FMR Investments.

The project, located near Kalgoorlie in WA, is known for its potential in nickel, base metals and gold.

Under the agreed terms, FMR Investments will pay Codrus A$300,000 ($195,853) in cash and provide a 2.5% net smelter return (NSR) royalty after the first 5,000oz of gold production. This royalty is capped at A$2.7m.

The Silver Swan South Project is situated just two kilometres from FMR's operational Gordon Sirdar gold mine.

Codrus will maintain the rights to nickel and base metals at the Silver Swan South Project.

In addition, it will grant FMR a 2.5% royalty on any products derived from these retained mineral rights once A$15m in gross revenue is achieved, with a cap also set at A$2.7m.

Furthermore, Codrus will retain the right to conduct exploration activities on the tenements for the minerals it holds rights to.

Codrus managing director Shannan Bamforth said: “The agreement to divest the gold rights at Silver Swan South to FMR Investments represents a sensible and logical rationalisation of our portfolio. As an operating mining company with a gold mine situated close by, FMR is the logical partner for us to team up with to explore for and develop any gold discoveries at Silver Swan South.

“The transaction crystallises $300,000 in cash to strengthen our treasury position to $1.9m to underpin ongoing exploration activities, with Codrus also retaining exposure to future upside from production via a 2.5% NSR royalty.

“At the same time, Codrus retains the rights to explore for nickel and base metals at Silver Swan South.”